As the strategy document was released in Canberra on Friday, Ms Gillard said there had been significant changes since the last paper in 2009.

This included a shift in global economic and strategic weight to the region, the renewed US focus on the pacific, Australian Defence Force (ADF) drawdowns in Afghanistan, East Timor and the Solomon Islands and the global financial crisis.

"The white paper underlines the enormous stake Australia has in managing strategic change in the Indo-Pacific region and managing it peacefully, in particular in a US-China relationship in which competition is minimised and co-operation maximised," Ms Gillard said.

"And in a region in which flashpoints, such as North Korea and territorial disputes, are managed peacefully and in a way that avoids the risk of dangerous miscalculations."

Ms Gillard said the government remained committed to manufacturing 12 advanced new submarines in South Australia.

However, due to the need for detailed design analysis, any further work on buying an existing or modified overseas model was off the table because it was unlikely to meet Australian requirements.

The federal government would work on the remaining two options - an all-new design or an evolution of the existing Collins-class submarines.

Ms Gillard said the federal government was committed to defence spending of two per cent of annual gross domestic product (GDP).

"I want to be clear that we see this as a longer term objective as and when fiscal circumstances allow," she told reporters in Canberra.

She said under Labor, defence spending over the four year forward estimates had topped $100 billion for the first time.

"In this year's budget we will once again allocate more than $100 billion to defence over the forward estimates."

Ms Gillard said defence spending would "rise in a modest way, relative to last year's budget estimates" and would be "appropriate and sustainable."

Defence minister Stephen Smith said the white paper set out a framework to "protect and defend the national security interests of the Commonwealth and continue to have an effective and capable Australian Defence Force".

He outlined four priorities for the ADF.

These were defending Australia, taking the lead in the South Pacific and East Timor, working with its partners in the Asia-Pacific and contributing to global operations, such as Afghanistan.

Mr Smith said there were no proposals to reduce military numbers.

Substantial work had been done to reorientate the army, resulting in three multi-role battalions based in Darwin, Townsville and Brisbane.

"This is a significant reshaping of the modern army," he said.

On the defence force posture review, Mr Smith said Australia needed to enhance ADF presence in the northern and western approaches to the mainland.

"The white paper refers to our part of the world not as the Asia Pacific or Indian Ocean rim, but the Indo Pacific," he said.

While the 2009 white paper had left open the possibility of building a fourth air warfare destroyer (AWD), Mr Smith said the government had decided on defence advice not to go ahead.

Ms Gillard said the government remained committed to the Joint Strike Fighter, as the principal ADF strike capability.

Three operational squadrons of the JSF will enter service around 2020.

In the interim, the 12 new Super Hornets with Growler technology would be bought.

"The cost of this purchase is estimated at around $1.5 billion over the next four years and will be contained in the forthcoming budget and included in Defence's four year estimates," she said.

Mr Smith said although Australia faced difficult fiscal times, the May budget would not reduce defence spending.

"The forward estimate years for the forthcoming budget will match, indeed have a modest increase on, the forward estimates for the previous budget," he said.

He confirmed the government would continue to provide the ADF with more than $100 billion in the forward estimate years and maintain an aspirational target of two per cent GDP growth in ADF spending.

"I would much prefer it to be closer to two per cent, than to 1.5 or to 1.6," Mr Smith said.

"But it is the case that it is an aspiration that the government has, and an aspiration that previous governments have also had."

Federal government ADF spending has not reached two per cent of GDP since 2000.